6. Results
6.3. Strategic intent
Chapter 6: Results
Chapter 6: Results
The elements that were noted from the analysis of the literature were incorporated into the approach that was used to carry out the assessment of the Strategic Intent process at case organisations. This was applied to integrated annual reports published by the organisations, the management reports which were issued on a periodic basis, and in the interviews which were conducted with the representatives from the case organisations.
An analysis of the coding of quotations from the review of the literature and the results of the interview questionnaires was done to assess whether there are differences in the pattern of the two sources. The codes were consolidated and refined during the review of the literature in order to improve the quality of the results. This took into consideration the aspects which were going to be tested during the data gathering stage. Figure 6:8 presents the outcome of this analysis:
Figure 6:8: Code grounding and density for literature review and interview questionnaire for Strategic intent
The results presented in Figure 6.8 indicate that there is an even spread across the codes from the analysis of the data gathered through the interview questionnaire and zero density when compared to the results of the literature review. This is due to the questionnaire being designed primarily to test different aspects of Strategic Intent
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which were expected to be discussed with participants and obtain a view on them. The profile when comparing the results of the literature review and the data gathered through the interview questionnaire also points to areas which were found to be key in both instances (literature review and interviews). Areas that featured prominently during the review of the literature were largely less prominent during interviews. This may point to the direct and focused testing of the research element (Strategic intent) with the case organisations.
A number of models and frameworks on strategy execution and project portfolios were identified during the review of the literature and it is interesting to note that the use of models and frameworks featured prominently at case organisations. It was observed at the four case organisations that the process of strategy execution considered external and internal context to develop the corporate strategy, which was translated into organisational processes for the implementation of the strategy in order to realise the intended outcome as articulated in Figure 2.4. It was noted that the four case organisations used the approach of linking strategic objectives to shareholder value which is outlined in Figure 2.7 and Figure 2.8. All four case organisations used the balanced scorecard to plan and present the performance achieved through the execution of the strategy through projects. A representative from the Freight Company confirmed that “the organisation adopted a strategy execution framework in 2013/2014 which was formally adopted by Exco which consists of seven steps, one of them focusing on defining strategy implementation programmes.” However, a representative from the Research and Development Company shared that “the lack of a strategy execution framework leads to inconsistent reporting which fuels bias reporting.” This may indicate that businesses do explore tools that may support their efforts in order to improve on how things are done. This was one of the gaps which were identified from the review of the literature and it was the aim of this study to close it.
The consolidated results of the prevalence of the elements of the Strategic Intent component of the conceptual model indicate that the case organisations have largely implemented the elements that were assessed as reflected in Figure 6.9. The individual results of the case organisations are discussed in detail further down in this section.
Figure 6:9: Prevalence of the Strategic Intent component of the conceptual model
Legend Yes Somewhat No
J K L
Telecoms Mining Research and Development
Freight
Strategic Intent Formalised Corporate Strategy J J J J
Formally Defined Strategic Objectives J J J J
Performance Measures (Targets) J J J J
Chapter 6: Results
It was noted during the responses provided by the participants in interviews and the review of management reports that the strategic intent at case organisations was developed in a collaborative process that involved key stakeholders. A representative from the Telecommunications Company indicated that “Group Strategy is responsible for facilitating the workshop with different stakeholders. They are responsible to ensure alignment of the strategy and that there is a collaborative approach in order to manage interdependencies among business units while we follow a structured framework.”
Similarly a representative from the Research and Development Company said that
“there are a number of different stakeholders that are invited to the strategy session.
We invite senior managers, Exco, the Board of Directors, the DMR and DST. We have a strategy facilitator that guides the process. We have experts that present on the state of the country and prevailing national imperatives such as Phakisa.” In other case organisations, external stakeholders were invited to bring a perspective given insights gained from their daily duties. The participation of external stakeholders was viewed by the participants that were interviewed as a source of invaluable insights that enriched the corporate strategy formulation and planning process. It was particularly critical for the Research and Development Company in which one of the participants shared that “the organisation is migrating into the fourth industrial revolution since it requires skills of the future and as a result we are collaborating with international players to reposition the organisation”. It was thus confirmed that all four case organisations had a formal process which was followed to formulate and plan how to execute the corporate strategy. A representative from the Research and Development Company stated that “Every November we hold a strategy session where managers, Execs, and the Board of Directors are invited to look at the issues at our company. We do an environmental scan and trend analysis. We look at where we should go as an organisation. The strategy session is a 3-day session and gives an input into the medium to long term strategic plan. The new business development unit consolidates the outcome of the workshop which is done in collaboration with an external facilitator.
The final document used to consult all the divisions.” The views of the participants that were interviewed are depicted in Table 6.1 below.
Table 6:1: Prevalence of defined strategic intent
It was noted that one of the case organisations adopted a process in which the outcome of the external corporate planning process would be circulated to the management team that was not part of the external planning process in order to obtain their input and further refine the corporate strategy. The process is facilitated by an external professional service provider and the outcome of the consultation process is
Freight Research and Development
Mining Telecoms
Formal corporate strategy √ √ √ √
Formal strategy formulation √ √ √ √
Stakeholder involvement √ √ √ √
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presented to the executive team for consideration and approval prior to a presentation to the Board of Directors. A representative from the Mining Company emphasised that
“we annually review the strategy based on the life of mine and the strategy around it.
This is brought into a five year view that is brought into a plan for the next 12 months.
The strategy for the year would then be presented to the CEO’s office and then the functional units. We normally have themes for the planning 12 month period. Each functional unit will then align their plans to the annual plan. This is how the strategic message reflects in the BU strategies.” He also added that “the CEO sets the strategic direction, the CFO is responsible for the financial aspect.” He elaborated that “once there is sign-off on the 5 year strategy, then there is structuring and planning of deployment of projects. This is followed by the development of estimates and budgets.
The organisation applies rigor in how the capital will be deployed. This will be done based on the BU strategy while delivering the corporate strategy.” It was noted that in all case organisations the corporate strategy was presented to the Board of Directors for consideration and approval prior to adoption and execution. A formalised corporate strategy is critical in cementing the strategic direction of the organisation. Furthermore it enables the business leaders to communicate a single message to stakeholders on what the strategic aspirations of the organisation are so that they are able to contribute meaningfully through their participation during the strategy execution phase. It was observed during the review of the literature that the disconnect between the strategic and operational level on the understanding of the corporate strategy may dwarf the expected results and it is thus fundamental to not only formalise the corporate strategy but also communicate it throughout the organisation.
It was critical to verify through a number of sources that the corporate strategy was indeed documented and approved by the executive team and the board of directors.
The verification was done through the review of internal reports, during interviews with participants and reporting through the annual reports. This was a critical check point for the study given that strategy formulation is outside of the scope of the study. It was noted from the review of the documents compiled and published by all four case organisations that the corporate strategy was indeed formalised as noted from the responses provided by participants during interviews. It was noted from the input provided by the representative of the Mining Company that the corporate strategy place a crucial role in the strategy planning process in which he emphasised that “the RDP plays a critical role in defining the strategy taking into consideration the timeframe, targeted values, complexity of initiatives and ease of execution. We use ranges and sensitivities to assess scenarios given the probabilities and proven practice. We have adopted a system with buffers in it that has technical and performance limits. However, we are more conservative in the budget looking at the minimum requirements to make this thing work. We look at the probability of realisation taking into consideration the risk and opportunities presented by the scenarios. However, this is not yet a formal process”.
Chapter 6: Results
It is the view of the representatives that were interviewed that the formalised corporate strategy is well defined and appropriate for some of the corporate activities. This was noted to be the case due to some of the business as usual activities that were necessary and would not reflect in the corporate strategy but were managed through the normal operations processes and reported on through the management structure.
It was noted that the strategic outlook in terms of planning horizon of the four case organisations was similar (Figure 6.10) with the exception of the mining company which based the long term corporate strategy on the life of mine (LOM). This meant that the different planning horizons were closely managed based on the remaining LOM, potential LOM expansion, and current year strategic objectives and targets.
Figure 6:10: Strategic outlook at case organisations
All four case organisations applied the same corporate strategy execution horizon of five (5) years and managed the execution on an annual basis. This means that five (5) year strategy execution plans would be developed and informed the focus for the current year (annual plan). This practice is imperative in ensuring that the plans that are executed on an annual basis are informed by the five year plan so that the organisation does not drift away from their overall corporate strategy. It was furthermore noted that some of the case organisations would evaluate the performance of the current year (annual plan) in the context of the five year plan which perpetuated the evolution of the corporate strategy and helped the organisation to maintain focus.
The focus of the mining company on the LOM (20 years) enabled the organisation to make decisions given the reserves that could be mined as they sought to achieve the objectives and targets. This approach was different from that which is adopted by the other three case organisations since they were not faced by a finite source of mineral
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resources (reserves in the ground). It was therefore a consideration by the mining company to not only meet their production targets but seek opportunities to extend the LOM through acquisitions and exploration projects.
Conclusion
It was encouraging to observe that the case organisations involved more than senior executives and the Board of Directors in the finalisation of the strategic plan that will be executed by the organisation as reported in literature. It was noted that there was purposeful involvement of managers in the finalisation of the corporate strategy in one of the case organisations. This is in agreement with what is reported in literature where Cocks (2010) promotes that strategy formulation should not end at executive level but needs input from the operational level to bring reliable insights into organisational capabilities and resource constraints. He advocates for this to encourage meaningful participation of operational people as a result of the understanding of why the strategy is implemented the way it is thus gaining support and buy in.
It was observed that the execution of the corporate strategy was in line with what Townsend (2009) concurred with in that a company’s strategy determines the course it will try to pursue over several years and thus guides the allocation of resources – financial, physical, and human. It was noted that the planning process spanned different horizons which enabled execution to be done in tranches. It was also noted that the execution of corporate strategy does not exist in a vacuum as noted by Getz and Lee (2011) who reported that management do not realise that managing strategy execution requires well-orchestrated management processes and need to thoughtfully manage the way the strategy is implemented.
The observation from the approach adopted by the case organisations was that defined processes on how to execute on the corporate strategy enabled a focused approach due to a common vision. It was noted that the case organisations had learned from what Dandira (2012) cautioned on in that “there is a knowledge vacuum since most top managers do not really know what they are supposed to do with the strategic plan; generally they lack knowledge about strategic management as a whole given that they only have fragments of information”. The management teams at both strategic and tactical levels of the organisation participated and contributed to the corporate strategy which enabled buy-in and the ability to rally around the executive team and the Board of Directors during the execution process in order for the organisation to realise the corporate strategy.
Chapter 6: Results